Russian-Ukraine hostilities signal start of energy wars

Every war has a motive. The Russia-Ukraine War has several. To understand why Russian President Vladimir Putin challenged Ukraine President Volodymyr Zelenskyy’s decisions and eventually gave the Russian Army the order to invade Ukraine, a background to the current crisis is necessary.

Ukraine’s growing political, business and trade ties with the US and Europe’s Nato signatories have worried Putin – the latter’s primary concern being the US setting up a Nato army base in Ukraine.

For months, an uneasy clam prevailed. Finally on February 24, after listing reasons in a speech broadcast on television Putin, ordered his army and air-force to attack Ukraine. Among the reasons he listed, “Russia could not feel safe, develop and exist because of a constant threat from modern Ukraine”. He said he wanted to protect people “subjected to bullying and genocide and aim for the demilitarisation and de-Nazification of Ukraine”.

Putin did not mention in his speech Russian major Gazprom’s gas pipeline project with Germany that would transit through Ukraine. Energy trade with Europe is the main issue here, not the likelihood of a Nato army base springing up in Ukraine or a genocide that never happened.

Following US lobbying and several discussions, Germany cancelled the Nord Stream 2 Baltic Sea [NS2] gas pipeline project on February 22. German Chancellor Olaf Scholz announced the decision one day after Russia officially recognised Ukrainian regions Donetsk and Luhansk as independent states. Three days later, Russian army invaded Ukraine.

Now a little about NS2 — the main reason for the war.

NS2 team completed construction of Europe’s path-breaking $11 billion energy project on September 10, 2021. Why didn’t the gas supply to Germany start for almost five months? Well, official reasons say, ‘it awaited clearances and certification’. Independent energy analysts say success of the gas pipeline would have would have earned huge profits to the stakeholders.

Among the partners, Russia’s state-controlled Gazprom stood to benefit the most as it has a majority stake in the project. Thereby giving “more power to Russia and threaten transatlantic security”.

An operational NS2 would have doubled the flow of Russian gas into Germany. This would have increased Germany energy dependency on Russia which supplies gas to other European countries’ too.

In the first half fiscal 2021, European Union imported 48.4 per cent of its gas demand from Russia. Runner-up Norway was a distant 18pc; Algeria 13.2pc; US 5.8pc; Qatar 4.4pc; Nigeria 3.4pc; and UK 3.2pc.

A significant portion of Europe’s supply of liquefied natural gas (LNG) came from the US, Qatar, and Russia in 2021, according to CEDIGAZ, an international non-profit association that publishes information on natural gas.

The CEDIGAZ report says, the US became Europe’s largest source of LNG in 2021, accounting for 26 per cent of all LNG imported by European Union member countries (EU-27) and the UK followed by Qatar with 24 per cent, and Russia with 20 per cent. In January 2022, the US supplied more than half of all LNG imports into Europe for the month.

Exports of LNG from the US to EU-27 and the UK increased from 3.4 billion cubic feet per day (Bcf/d) in November 2021 to 6.5 Bcf/d in January 2022—the most LNG shipped to Europe from the United States on a monthly basis to date, according to the US Department of Energy’s LNG Monthly report.

[Sudeep Sonawane, an India-based journalist, has worked in five countries in the Middle East and Asia. Email: [email protected]]